Today’s trade idea for option traders: Old Republic International (trade closed)
(Last Updated On: 7. January 2023)
It’s literally just a couple of days ago when I closed my last trade on ORI which was a bit special. But as the price of Old Republic International had hit its all time high and continues to rise, I’ve set up another trade which I would like to introduce to you. This one is deep in the money, because of its expiration in June it was possible to choose the strikes only in 5 point steps. So check it out, folks.
The information I am giving you in this article is for informative purposes only and should not be treated as investment advice. The information presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in trading activities related to the information in this article should do their own research and seek advice from a licensed financial adviser.
Type of a trade: Cash secured put (in the money)
Alternatively: Bull put spread
Expiration: 18th June (53 days)
Premium for 1 option: between $520 and $600 on the day this article was published
Margin: apprx. $340 on the day this article was published
Pros for this trade:
– A pretty strong long signal (I’m using the ADX-Indicator), giving a higher probability that the price would hit the strike in the next 53 days. But frankly, I don’t believe that the price would hit $30 in such brief time span. Therefore, there are higher chances that the price would approach close to the strike at the end of the expiration of the option. So in this case, we are relying only on the time decay. If the price would cross the strike of $30, so much the better!
– A dividend of 3.64% on the day the trade idea was published, in case the price would fall below the strike and you would get the stock assigned (Source: finviz.com)
Cons for this trade:
– Low IV Rank and IV Percentile
– The long signal could turn out as a flash in the pan
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Result of this trade: Trade closed on 4th June
Realized profit for 1 option: around $165
Days in the trade: 39 of total 53
As I wrote it when I opened the trade, it would be very unlikely the stock would hit the level of $30. As the price was moving sideways, you could profit just from the time decay. I even could keep the position a bit longer open. But then I decided to close the trade and in return open another one on Old Republic with a longer time expiration. Check out the screenshot, folks.
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